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Fortress Investment Group LLC raised $634 million with an initial public offering and will be listed under the ticker 'FIG.'
February 9 2007: 6:48 AM EST
NEW YORK (Reuters) -- After weeks of anticipation, packed road shows and massive demand, Fortress Investment Group LLC has raised $634 million with an initial public offering, the first such move by a diversified private equity and hedge fund in the United States.
The 34.3 million class A share offering sold for $18.50 per share late Thursday, compared with a $16.50 to $18.50 forecast range, according to an underwriter.
The offering price gives the New York-based company an initial market capitalization of more than $7.4 billion.
Earlier Thursday, a quartet of IPOs soared in U.S. market debuts, posting double-digit gains despite a slumping Dow and Nasdaq and snapping a slow market for new issues so far this year.
However, Fortress (Charts) is set for its own grand opening on the New York Stock Exchange, which could entice other hedge funds to follow its lead, analysts said.
The vast majority of shares were sold to institutional investors, leaving only a small percentage of shares for retail buyers to fight over Friday morning, said Ben Holmes, publisher of Morningnotes.com, an independent research firm in Boulder, Colo.
"People will be scrambling for shares tomorrow (Friday)," Holmes said. "It's obviously in big demand."
Possible trend
Retail buyers, who have limited access to hedge funds due to the large levels of investment required, might find Fortress shares particularly appealing, said Adam Sussman, senior analyst at consultant Tabb Group.
But over the long term, the Fortress IPO could also make waves in the hedge fund community, Sussman said.
With hedge funds already listed in London, dramatic gains for Fortress shares on Friday could open the door for a number of similar firms to seek U.S. listings and, more importantly, provide another stream of capital, Sussman said.
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"I think this is the beginning of a trend," Sussman said. "If it goes well, I would expect some more premium names to go public. This is starting off with a well recognized name in the group."
Fortress has ballooned from its inception in 1998, growing assets to $29.7 billion at the end of September 2006 from $1.2 billion at the end of 2001.
In January, Britain's Polar Capital Holdings PLC, which runs hedge funds and other funds, said it was applying to float shares in London.
Shares of the U.K.'s Man Group, the world's largest listed hedge fund company with more than $60 billion under management, have more than doubled over the past two years.
Net income rose to $192.7 million in 2005 from $40.3 million in 2003.
Due in large part to its financial performance, Fortress filled rooms for its road show presentations, which led to shares being "massively" oversubscribed, said Scott Sweet, managing director for IPO research firm IPOboutique.com.
"Road shows were wall to wall and standing room only," said Sweet. "The underwriters certainly could have priced it higher with no problems."
The offering represents 8.5 percent of total shares in the company, but principals of the firm - Peter Briger, Wesley Edens, Robert Kauffman, Randal Nardone and Michael Novogratz - own 100 percent of the class B shares and about 78 percent of shareholder voting power, according to a filing with the Securities and Exchange Commission.
Prior to the IPO, Fortress sold about 55 million Class A shares, or a 15 percent stake, to Nomura Holdings Inc. (Charts), Japan's biggest investment bank, for about $888 million.
Fortress officials said the deal would help the firm expand into Asia.
IPOs: Not too hot, not too cold
The firm said it is going public to "maintain and expand our position" in the global investing arena, reward talented employees, give it acquisition currency and give it a sense of "permanence" with investors.
The firm, which calls itself one of the largest "alternative" investment managers, plans to use net proceeds from the offering to repay debt and for general business purposes.
Led by Goldman Sachs (Charts), Banc of America Securities LLC, Citigroup (Charts), Deutsche Bank Securities and Lehman Brothers (Charts), underwriters have the option to buy an additional 5.1 million Class A shares to cover overallotments.
The firm will list its shares on the New York Stock Exchange under the ticker "FIG" .
February 9 2007: 6:48 AM EST
NEW YORK (Reuters) -- After weeks of anticipation, packed road shows and massive demand, Fortress Investment Group LLC has raised $634 million with an initial public offering, the first such move by a diversified private equity and hedge fund in the United States.
The 34.3 million class A share offering sold for $18.50 per share late Thursday, compared with a $16.50 to $18.50 forecast range, according to an underwriter.
The offering price gives the New York-based company an initial market capitalization of more than $7.4 billion.
Earlier Thursday, a quartet of IPOs soared in U.S. market debuts, posting double-digit gains despite a slumping Dow and Nasdaq and snapping a slow market for new issues so far this year.
However, Fortress (Charts) is set for its own grand opening on the New York Stock Exchange, which could entice other hedge funds to follow its lead, analysts said.
The vast majority of shares were sold to institutional investors, leaving only a small percentage of shares for retail buyers to fight over Friday morning, said Ben Holmes, publisher of Morningnotes.com, an independent research firm in Boulder, Colo.
"People will be scrambling for shares tomorrow (Friday)," Holmes said. "It's obviously in big demand."
Possible trend
Retail buyers, who have limited access to hedge funds due to the large levels of investment required, might find Fortress shares particularly appealing, said Adam Sussman, senior analyst at consultant Tabb Group.
But over the long term, the Fortress IPO could also make waves in the hedge fund community, Sussman said.
With hedge funds already listed in London, dramatic gains for Fortress shares on Friday could open the door for a number of similar firms to seek U.S. listings and, more importantly, provide another stream of capital, Sussman said.
National CineMedia stock soars in premiere
"I think this is the beginning of a trend," Sussman said. "If it goes well, I would expect some more premium names to go public. This is starting off with a well recognized name in the group."
Fortress has ballooned from its inception in 1998, growing assets to $29.7 billion at the end of September 2006 from $1.2 billion at the end of 2001.
In January, Britain's Polar Capital Holdings PLC, which runs hedge funds and other funds, said it was applying to float shares in London.
Shares of the U.K.'s Man Group, the world's largest listed hedge fund company with more than $60 billion under management, have more than doubled over the past two years.
Net income rose to $192.7 million in 2005 from $40.3 million in 2003.
Due in large part to its financial performance, Fortress filled rooms for its road show presentations, which led to shares being "massively" oversubscribed, said Scott Sweet, managing director for IPO research firm IPOboutique.com.
"Road shows were wall to wall and standing room only," said Sweet. "The underwriters certainly could have priced it higher with no problems."
The offering represents 8.5 percent of total shares in the company, but principals of the firm - Peter Briger, Wesley Edens, Robert Kauffman, Randal Nardone and Michael Novogratz - own 100 percent of the class B shares and about 78 percent of shareholder voting power, according to a filing with the Securities and Exchange Commission.
Prior to the IPO, Fortress sold about 55 million Class A shares, or a 15 percent stake, to Nomura Holdings Inc. (Charts), Japan's biggest investment bank, for about $888 million.
Fortress officials said the deal would help the firm expand into Asia.
IPOs: Not too hot, not too cold
The firm said it is going public to "maintain and expand our position" in the global investing arena, reward talented employees, give it acquisition currency and give it a sense of "permanence" with investors.
The firm, which calls itself one of the largest "alternative" investment managers, plans to use net proceeds from the offering to repay debt and for general business purposes.
Led by Goldman Sachs (Charts), Banc of America Securities LLC, Citigroup (Charts), Deutsche Bank Securities and Lehman Brothers (Charts), underwriters have the option to buy an additional 5.1 million Class A shares to cover overallotments.
The firm will list its shares on the New York Stock Exchange under the ticker "FIG" .