Wall Street's Marathon Man Set to Run Again
08/15/06 - 03:22 PM EDT
Lauren Silva
"We prefer to invest in a real company with real earnings," said one fund manager who asked not to be identified.
The deal's success will certainly be helped by the underwriting team. It's not every day a bulge-bracket investment firm, Citigroup(C Quote - Cramer on C - Stock Picks) in this case, shares the spotlight on an IPO with a third-tier investment firm such as Ladenburg Thalmann, a boutique bank that is responsible for running a large number of blank-check IPOs. UBS(UBS Quote - Cramer on UBS - Stock Picks) also is part of the underwriting team. "You have big names leading the deals here. It's not 'Burn 'Em and Turn 'Em Securities' like it used to be," says Menlow. In this case, the reason for Citigroup leading the IPO is fairly simple. Gross' relationships with the Ladenburg CEO spans back decades, to Northwestern University's Kellogg School of Management, where Gross attended graduate school with Mark Klein. And the Ladenburg CEO, Mark Klein, is the brother of Michael Klein, the chief executive officer of Citigroup's global banking operation. Gross' founding status at Marathon poses other conflicts. He recently walked away from Apollo to pursue new opportunities, including running a multistrategy alternative investment manager called Magnetar Capital. Gross' involvement with Magnetar could keep Marathon from pursuing profitable acquisitions. "Although Mr. Gross will endeavor to allocate acquisition opportunities in a fair and equitable manner, it is possible that we may not be given the opportunity to participate in certain acquisition opportunities that Mr. Gross determines to offer to Magnetar Financial LLC," the prospectus says. For Marathon investors, the finish line could be a long way off.
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