After pricing at the top of its price range yesterday, Fortress Investment Group debuted on the New York Stock Exchange at roughly $35 per share, roughly doubling its market capitalisation.
The IPO marks the first time a firm with a significant private equity business has gone public in the US, and is being watched carefully by private equity professionals who are pondering ways of monetising their own investment management franchises.
New York-based Fortress is selling a 10 percent stake in its management company. At press time the stake was worth roughly $1.2 billion, which values the entire firm at $12 billion. Fortress has roughly $30 billion in assets under management. Its IPO values the firm at roughly 40 percent of assets under management, a huge increase over previous valuations assigned to alternative investment management companies.
In previous transactions, hedge fund and private equity fund management companies have been valued in the range of 10 percent of assets under management.
Valued similarly to Fortress, The Carlyle Group, with $54.5 billion under management, would have a market capitalisation of $22 billion on the public markets. The founders of Carlyle, along with other large, diversified managers of private equity and alternative assets, have pondered ways of unlocking their franchise value through the public markets.
Fortress has private equity assets of $17.5 billion, according to the firm. It also manages hedge fund, real estate and other alternative assets.
The firm was founded in 1998 by Robert Kauffman, Peter Briger, Wesley Edens, Randal Nardone and Michael Novogratz.