FIG plans first U.S. hedge fund IPO

FIG plans first U.S. hedge fund IPO

	Published : Mon, 05 Feb 2007 22:11 By : Agencies Print this Story

NEW YORK (AFX) - Fortress Investment Group plans to become the first publicly traded U.S. private equity and hedge fund this week in an initial public offering that will raise about $600 million and value the entire company at about $7 billion.

Fortress Investment Group plans to sell 34.3 million Class A shares for between $16.50 and $18.50 per share, or a total of about $600 million at the midpoint. The company estimates net proceeds of $533 million from the sale, and will use most of the money to pay off debt, according to a filing with the Securities and Exchange Comission.

Investors will end up with 38.4 percent of the Class A shares, representing about a 8.6 percent voting interest. The company's principals will retain about 77.7 percent voting interest through a special class of shares.

Fortress Investment Group has applied to list its shares on the New York Stock Exchange under the symbol 'FIG.'

Founded in 1998, the New York-based company's assets under management have grown to $29.9 billion from $1.2 billion at the end of 2001.

Coupling its own money with investments from clients, Fortress Investment Group operates three types of funds. It has $17.5 billion in private equity funds, which seek to buy controlling interest in companies based in North America or Western Europe, take them private and later sell them or take them public at a profit.

Fortress Investment Group manages $9.4 billion in hedge funds specializing in finding troubled loans or stocks the funds can buy cheaply. The funds also try to capitalize off imbalances in financial markets.

The company also manages two publicly traded real estate investment trusts, Newcastle Investment Corp. and Eurocastle Investment Ltd., with a combined market value of $3 billion.

Most of the company's profit comes from investment gains in assets the company buys. It charges fees for managing investment funds. It also earns commissions known as incentive income when the funds do well.

The company earned $192.7 million in 2005, up from $114.5 million in 2004.