Friday, February 09, 2007

Fortress’s ‘Standing-Room Only’ I.P.O. Prices at High End

The first hedge fund and private equity company to go public in the United States makes its market debut Friday at $18.50 a share, at the high end of its expected price range. At that price, the company, Fortress Investment Group, which manages about $30 billion in assets, would have a market value of $7.4 billion.
Demand for the offering was strong, analysts said. People who attended a presentation by Fortress on the offering on Wednesday said that it was standing room only.
Though traditionally restricted to wealthy investors and institutions, hedge funds have attracted the attention of many average investors in recent years, in part because of the huge profits that the top funds can achieve. Hedge funds’ penchant for secrecy and the riches amassed by the top fund managers, many of whom have built modern-day castles in and around Greenwich, Conn., have only added to the allure. Last year’s publication of the book “Hedge Funds for Dummies” was just the latest example of hedge funds’ entry into the popular culture.
But some have grown concerned about mom-and-pop investors diving into hedge funds, which sometimes take big risks to achieve their above-average returns. Regulators are considering stricter rules about what kinds of investors should be allowed to put their money in hedge funds.
Amid this growing buzz, Fortress on Friday will become the first U.S. hedge-fund firm to sell shares to the public — and demand appeared heavy. Last week, Fortress said in a filing that it expected to sell the shares in a range of $16.50 to $18.50 each. The price was set Thursday at $18.50 per share, raising $634 million for Fortress.
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