Fortress Investment to go public

The alternative investment giant, with a nearly $14bn private equity program, has filed to list on the NYSE in a $750m IPO that aims to sell the public a 10 percent share of the firm.

Fortress Investment Group has filed to go public on the New York Stock Exchange, the firm announced today.

The firm, based in New York, is seeking to raise as much as $750 million (€588 million) through the listing of Class A shares, representing 10 percent of the company. Fortress’ five principals will control the remaining 90 percent of the firm through Class B shares, according to the firm’s S-1 filing with the Securities and Exchange Commission.

Fortress, founded in 1998 and led by Peter Briger, Wesley Edens, Robert Kauffman, Randal Nardone and Michael Novogratz, reports having $26 billion in assets under management. The firm manages roughly $13.6 billion in private equity assets, including what it calls “a family of “long dated value” funds focused on investing in undervalued assets with limited current cash flows and long investment horizons”.

The firm lists $9.4 billion in hedge fund assets, including hybrid and liquid strategies. The firm also controls two publicly traded companies under the “Castle” brand that invest primarily in real estate and real estate debt instruments. Fortress has been one of the largest and most active investors in the private equity real estate space in recent years. The firm has been spending significant amounts of capital in the German residential sector and, in the US, recently acquired ski resort operator Intrawest.

Fortress’ intentions to go public were first reported in the July issue of sister publication Private Equity International.

Fortress’ three founders, Edens, Kauffman and Nardone, met while working at BlackRock, a debt-focused investment firm founded by Larry Fink, a former partner at The Blackstone Group. BlackRock merged with Merrill Lynch this year.

The Fortress filings indicate that the firm is seeking a public listing in part to provide a compensation tool for its many employees, as well as to “solidify” its presence in the market. Additionally, Fortress notes that as institutional and individual investors allocate capital to “alternative asset” managers, they will buy Fortress’ stock.

Fortress plans to continue expanding the investment products it offers, the filings note.

Fortress is reporting net income of $192 million in 2005, up from $114 million in 2004 and $40 million the previous year.

Goldman Sachs is the lead underwriter for the offering.