Kohlberg Kravis Roberts (KKR), the private equity firm, plans to raise about $1.25 billion (£619 million) though a flotation on the New York Stock Exchange, it emerged last night.

In a filing to the US Securities and Exchange Commission, KKR said that none of its existing partners will sell their stakes in the firm but that proceeds from the float will be used to expand its business.

The move comes as Kenneth Griffin, founder of Citadel, launches advanced preparations to float or sell part of the company as part of plans to turn the American hedge fund manager into a diversified Wall Street institution, like Goldman Sachs or Morgan Stanley.

Citadel, which is expected to be valued at about $15 billion (£7.4 billion), is working with Lehman Brothers and Goldman Sachs on several alternative proposals, preparing the way for Mr Griffin to cash out some of his holding at the same time as raising money to expand the business.

Citadel and KKR’s plans have emerged less than a fortnight after Blackstone, the American private equity firm, was floated, raising $4.13 billion, valuing it on its first day of dealings at $33 billion. The shares have since slid by 4 per cent.

At the time of the Blackstone float, it emerged that KKR had appointed Morgan Stanley and Citigroup, the American investment banks, to prepare a float. Last night, the private equity firm said it hoped to float in the third or fourth quarter of the year.

The most likely scenario for Citadel, which manages about $13 billion of investment capital, is that a decision will be made in the next few weeks to float on the New York Stock Exchange. An alternative would entail Citadel selling a minority stake privately to an institution or a consortium of financial institutions, possibly as a precursor to a full-blown initial public offering.

Citadel’s hedge funds are highly leveraged and are understood to control about $100 billion of investments in total, when borrowings are included. The fund manager, which has its headquarters in Chicago, is thought to account for 3 per cent of all equities trading on the London, New York and Tokyo stock exchanges. In addition, Citadel is said to make up 15 per cent of America’s options trading and 10 per cent of its Treasury bond market.

Citadel, which employs about 1,000 staff in Chicago, New York, San Francisco, London, Tokyo and Hong Kong, was the second-best-performing hedge fund manager last year, according to Alpha, the industry magazine.

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