Fortress Investment Group, the first U.S. hedge fund to file for an IPO, wants to raise up to $634 million in its upcoming offering. The New York hedge fund and private equity firm plans to offer 34.2 million shares at a range of $16.50 to $18.50, according to a regulatory filing. In November,
Fortress made a bit of history when it filed for an initial public offering. Fortress oversees $29.7 billion in assets, making it one of the largest hedge-fund and private-equity managers. Shares will trade on the New York Stock Exchange under the symbol FIG and use the name Fortress Operating Group. Other U.S. hedges are closely watching the Fortress IPO to see how it's received by investors. Many believe that other hedge funds will soon follow with their own IPOs, if shares of Fortress make a strong debut. A month after filing for the IPO, Japan's Nomura ( NMR) investment bank announced it was buying a 15% equity stake in Fortress for $888 million. The deal recently closed. After the offering, the five principals at Fortress -- Peter Briger, Wesley Edens, Robert Kauffman, Randal Nardone and Michael Novogratz -- will own 77.7% of the total combined voting power of the firm's Class A and Class B shares.
Fortress says that in order to "maintain and expand" its position as a leading global alternative asset manager, "we need people, permanence, capital and currency. As a public company, we will be best positioned to meet each of these goals." The firm plans to use $250 million toward a $600 million outstanding loan as well as other revolving credit and fund additional commitments to existing private equity funds. After the offering is completed, Fortress expects to have 89.3 million shares of common stock outstanding and a market cap of $1.65 billion. Founded in 1998, the firm has been expanding quickly. Just five years ago, the firm had $1.2 billion in assets under management. The rapid growth at Fortress is indicative of all the money that has been pouring into hedge funds and private equity firms the past few years. As of Sept. 30, Fortress's investments and commitments to its funds were $495.7 million, with unfunded commitments to private equity funds of $68.8 million. Over just two years, Fortress' profit more than quadrupled from just $40.3 million at the end of 2003 to $192.7 million at the end of 2005. In the first nine months of last year, Fortress earned $158.6 million. The majority of Fortress' revenue comes from interest and dividend income generated from the stock and private equity portfolio holdings. In the first nine months of last year, revenue totaled $897.4 million. Expenses totaled $886 million. Goldman Sachs ( GS), Bank of America ( BAC), Citigroup ( C), Deutsche Bank ( DB) and Lehman Brothers ( LEH) are underwriting the IPO.