Fortress at the Ramparts

If 2006 was the year of public offerings for boutique investment banks, this year could be the year of hedge fund IPOs.

Fortress Investment Group is expected to price its much-anticipated initial public offering late Thursday in what should be the largest IPO so far this year.

As the first hedge fund to go public, Fortress could be instrumental in opening the doors for more hedge funds and other alternative investments to look to the capital markets to help them build their businesses. Of course, much depends on how well the IPO is received by investors -- but from the looks of pre-IPO demand for the stock, that shouldn't be a problem.

Fortress plans to raise up to $634 million in the IPO by offering 34.2 million shares. They are expected to price within a range of $16.50 to $18.50 a share. The deal could value Fortress at around $7 billion.

Observers are looking for the hedge fund to price toward the high end of its range.

One trader said Fortress had garnered so much interest that an investor luncheon it scheduled to hold on Wednesday was completely sold out. (Fortress declined to comment for the article, citing that it was in a quiet period.)

"IPO markets have windows, and the window is open for private equity right now," says Sal Morreale, an institutional sales trader at Cantor Fitzgerald who specializes in IPO trading.

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