Frenzy Feeding Fortress Flotation

Date: Friday, February 9, 2007
Author: Hedge Fund Daily

Today’s the day Fortress Investment Group makes history as the first U.S. hedge fund and private equity firm to float. From all indications, it looks like Fortress is in for a deluge of dollars as the initial public offering is at least 25 times oversubscribed. The demand for shares, one source told Financial Times, is "insane and ridiculous," beyond the wildest imagination of firm founders the trio formerly of BlackRock Financial Management, Wesley Edens, Robert Kauffman and Randal Nardone. The IPO could garner about $635 million, if it sells the 34.3 million A shares at the high range of the share price of $18.50. A number of other firms are closely watching. There has been rumbling that The Blackstone Group, Kohlberg Kravis Roberts, The Carlyle Group and Citadel Investments are all toying with the idea of following Fortress’ footsteps. If the IPO succeeds, it would be a dramatic turnaround from a year ago when several firms shelved their plans for a flotation as some large firms’ IPOs debuted with a whimper. MarketWatch notes that Fortress’ IPO success could result in a rare feat for a new floater: an IPO that meets at least a requirement for becoming a member of the Standard & Poor’s 500 Index. Of course, there are other requirements, but size wise, after the IPO, Fortress could have a market cap of more than $7 billion; S&P requires a minimum of about $4.5 billion. In honor of the historic occasion, the Fortress founders were called upon to ring the opening bell of The New York Stock Exchange Friday morning.