I created the Private Equity section on my blog to track some of the changes in the private equity market and consolidate my project research in one place. I am doing an analysis on the recent Fortress Group’s (FIG) IPO and post-IPO market reaction; the primary goal being to answer some trivial questions…….
– Is there a reason (other than owners cashing out) why private equity firms are going public?
– Why are these firms being valued so high?
– Is this counter-intuitive phenomena going to last?
A little background on Fortress first…..
Fortress was founded in 1998 as an asset-based investment management firm with a fundamental philosophy premised on its alignment of interests with the investors in its funds. Fortress raises, invests and manages private equity funds, hedge funds and publicly traded alternative investment vehicles. The company’s three core businesses are:
a. Private Equity – Control oriented investments in USA and Western European companies with good cash flows and a strong asset base.
b. Hedge Funds – The hedge fund business is comprised of two business segments: (i) hybrid hedge funds â€“ which include two sets of funds, one set that makes highly diversified investments globally in undervalued and distressed assets, including loans, assets and corporate securities and another set of funds that invest with a broad mandate, similar to endowment portfolios of large universities; and (ii) liquid hedge funds â€“ which invest globally in fixed income, currency, equity and commodity markets and related derivatives to capitalize on imbalances in the financial markets.
c. Real Estate – This business is made up of two managed publicly traded companies, Newcastle Investment Corp. (NYSE: NCT) and Eurocastle Investment Limited (ENXT: ECT).) These companies currently invest primarily in real estate and real estate debt investments.