Tuesday, December 19, 2006
Steamboat Springs The investment firm that is buying the Steamboat Ski Area plans to go public and hopes to raise nearly $750 million, which the firm could then invest in its assets.
Fortress Investment Group is a New York-based private equity firm and hedge-fund that most recently entered the ski resort business when it purchased Intrawest in October for $2.8 billion in cash. Intrawest manages 14 ski resorts in the United States and Canada including Copper Mountain and Winter Park Resort. Intrawest founder Joe Houssian announced his retirement a month after Fortress purchased the company. Intrawest's chief operating office took over, while reporting to Fortress executives.
Fortress is an asset manager with about $26 billion in assets.
Fortress manages about $9.4 billion in hedge funds. Hedge funds are typically formed by a group of wealthy investors who pool their money to invest in securities, commodities, currency and undervalued and distressed assets, including loans, assets and corporate securities.
The other major component of Fortress is management of a $13.6 billion private equity fund. The fund invests in North America and Western Europe and acquires asset-based businesses with significant cash flows. Fortress has offices worldwide.
The Fortress firm has more than 250 investment professionals on staff along with five principal owners. The firm collects a management fee based on the performance of its investments.
Fortress was founded in 1998 by Wesley Edens, Robert Kauffman and Randal Nardone, who formerly worked together at the New York-based BlackRock Asset Investors, according to Bloomberg financial news.
Edens runs private-equity investments, Kauffman handles European activities and Nardone heads the legal and structured finance unit, Bloomberg reported. The other principals in the company are former Goldman Sachs Group partner Peter Briger and Michael Novogratz. Briger heads the distressed-debt investments and Novogratz works in the firm's hedge fund unit.
Fortress started as a private equity firm and has since expanded into hedge funds, real estate and debt. Since March 2005 the company's assets have doubled, according to Bloomberg. The firm's assets have grown from about $1.2 billion in December 2001 to $26 billion as of September 2006, according to a Securities and Exchange filing.
When Fortress goes public, the five principals in the firm will retain 90 percent control. Investor analysts have noted that once Fortress becomes a publicly traded company, it will be subject to SEC disclosures that include information private equity firms would rather not disclose, like where fund managers are investing money. Bloomberg reported no U.S. firms comparable to Fortress have gone public, but others might follow its lead.
Fortress filed with the SEC on Nov. 8 to announce the company's intentions to have an initial public offering.
In the filing Fortress stated it was going public to offer incentives to its employees through stock options and to allow the firm to "more efficiently access capital."
Fortress also disclosed its earning and revenues. Distributable earnings grew from $54.8 million in 2003 to $240 million in 2005. The firm's net income for the first half of 2006 was $88 million, almost double what it was during the same period in 2005. Revenues during that time period were $877.5 million.