FORTRESS OPEN TO PUBLIC OFFERING

When, in May, Kohlberg Kravis Roberts raised $5 billion through a private placement and subsequent listing on the Euronext Amsterdam exchange, excited market watchers listed on one hand the likely names for such a deal. Many overlooked perhaps the most logical candidate – Fortress Investment Group, with $21 billion in equity capital under management across multiple lines of business.

The New York-based private investment giant is, in fact, exploring its options with regard to a public listing, according to several sources. A spokesperson for Fortress Investment did not return a call for this article.

According to sources, Fortress is eyeing a structure unlike KKR's. Instead of raising a pool of capital earmarked for investment in Fortress funds, Fortress is considering listing a portion of its general partnership – the business that generates carried interest and fees from Fortress' many investment activities.

Fortress, founded in 1998, has a major, $10 billion private equity business, but also significant hedge fund, real estate and lending activities. The latter investment strategies generate a diverse flow of income, which public investors will find attractive. Sources did not know whether Fortress is considering a dividend-paying vehicle for the public. KKR's Euronext vehicle does not pay dividends, but rather re-invests profits in new opportunities.

Fortress is no stranger to the public markets. Two real estate divisions, Newcastle and Eurocastle, are listed as REITs on the New York Stock Exchange and Euronext Amsterdam exchange, respectively. A third group, Northcastle Trust, is seeking a listing in Canada.

Fortress has raised its profile around the world with a string of groundbreaking deals. In May, the firm's European team, led by Kauffman, announced a deal to acquire the entire portfolio of government-owned apartments from the city of Dresden for €1.7 billion ($2 billion). The deal helped wipe out Dresden's public debt. Fortress also made headlines in 2003 for its acquisition of loans to singer Michael Jackson from Bank of America. The deal was backed by Jackson's valuable catalogue of Beatles and other songs.

An IPO would be a significant monetising event for Fortress' three co-founders, Robert Kauffman (pictured), Wesley Edens and Randal Nardone, who met at BlackRock.

An IPO would be a significant monetising event for Fortress' three co-founders, Robert Kauffman (pictured), Wesley Edens and Randal Nardone, who met at BlackRock.

VSS ADDS MANAGING DIRECTORS
Veronis Suhler Stevenson, a New York-based private equity firm, has promoted Nick Veronis, David Holland and Trent Hickman to managing director positions with the firm. The three, who started as associates at the firm six years ago, have increasingly taken on leadership roles at portfolio companies and have been significant players in recent deals. Veronis, son of cofounder John Veronis, will be responsible for originating and structuring investment opportunities and managing portfolio companies. Holland, based in the firm's London office, recently led the acquisition of Sherston Publishing and Granada Learning. Hickman will be responsible for developing investment opportunities, conducting due diligence, arranging debt financing for portfolio investments and monitoring portfolio companies. The firm invests in the media, communications, information and education industries in North America and Europe.

CASTLE HARLAN NAMES NEW PRESIDENT
New York buyout firm Castle Harlan announced in June that long-time partner Justin Wender has become president of the firm. Wender, 37, will replace Leonard Harlan, who co-founded Castle Harlan along with John Castle in 1987. Harlan will become chairman of the firm's newly formed executive committee. Wender was named chief investment officer and senior managing director of the firm in 2004. He joined Castle Harlan in 1993 and has been with the firm over three funds, the most recent of which closed on $1.2 billion (€936 million) in 2003. Prior to joining Castle Harlan, Wender worked for two years in the corporate finance group of Merrill Lynch. Castle, chairman of the firm, said in a statement: “[Wender] has a collegial style that encourages people to work together effectively, and he commands the respect of his colleagues and our limited partners.” Castle Harlan today has 10 managing directors. It concentrates on North American middle market businesses, but has completed deals in the UK and continental Europe.

PALLADIUM HIRES GARY NUSBAUM
Palladium Equity Partners in New York has hired Gary Nusbaum, a former managing director with Aetos Capital. Nusbaum will join the firm as managing director and will leverage his experience investing in the US Hispanic market and Latin America to lead new deals for the New York-based firm. Nusbaum headed private equity investments for Aetos Capital, an independent investing firm based in New York, from 2003 to 2005. He began his investing career at Warburg Pincus in 1989 and became a managing director with the firm in 1997. Nusbaum was a member of Warburg Pincus's media practice, and he also built and ran the firm's office in Sao Paulo and managed the firm's Latin American practice. Palladium is a buyout firm targeting US-based companies that have links to the Hispanic community.

BASKETBALL LEGEND TEAMS WITH RLJ
Bethesda, Maryland-based RLJ Companies, an investment platform led by billionaire Robert L. Johnson, has announced that basketball legend Michael Jordan will co-invest with the firm as well as become a managing member of its sports investment platform. Johnson's firm is minority-owned by The Carlyle Group and the two firms have an agreement whereby Carlyle can co-invest in RLJ deals. In a statement, Johnson said of Jordan: “Our joint venture will allow Michael to invest in private equity, hedge funds, financial services, real estate, film production, and other business interests that my holding company is pursuing.”

EDGESTONE SPINS IN
Canadian private equity firm EdgeStone Capital Partners has agreed to be acquired by Toronto Stock Exchange-listed income trust GMP Capital Trust in a deal worth roughly C$155 million (€109 million, $139 million). GMP Capital has three divisions focused on investment banking, institutional clients and private banking. Terms of the deal give the institutional services division of GMP – Griffiths McBurney – all the equity in EdgeStone and a “portion of the carried interest entitlements in Edgestone's funds”, according to a statement. EdgeStone will receive C$62 million in cash as well as 4.02 million units in Griffiths McBurney, which can be converted into shares in GMP. All EdgeStone employees will be subject to multiyear contracts and will retain a majority of the carried interest from EdgeStone funds. EdgeStone currently has more than C$2 billion in capital under management.