We've noted over the years that more than a few private equity companies have grumbled about their underwriters, suggesting they ought to enter the underwriting business to create a playing field more to their liking. So far, only one private equity firm has taken that step: Kohlberg Kravis Roberts.

Since 2007, KKR Capital Markets "has grown into an important cog in KKR's business," notes The Deal. "While KCM represents only a minuscule portion of the firm's income stream--it brought in $79.1 million of fee-related income in 2010, compared to $2.1 billion of economic net income for the entire firm--its activities have much greater implications for KKR's structure as a whole and its relationships with advisers and investors."

Clearly, the firm now has an apparatus that allows it to break its dependence, if only a little, from the traditional investment banks. Interestingly, it was during the financial crisis that the unit really earned its stripes. Its first bond deal was a $1 billion financing for SunGard in September 2008.

The traditional investment banks, in the pre-Volcker Rule days anyway, were all too willing to jump into the private equity business, often in competition with some big clients, the private equity firms. Now, it's the investment banks turn to grumble about private equity firms encroaching on their turf.

For now, KKR argues that its capital markets unit is small and competing for scraps. But it is being eyed nervously.

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