The IPO Buzz: A Mighty Fortress

 
At last count, the calendar was into the double digits.  Fourteen companies are planning to go public this week, which just happens to be the week before Valentine’s Day, on Feb. 14. Now that’s a pre-holiday rush. If all of these deals get priced, they could raise over $3.1 billion. That’s big.
 
And things got a lot more exciting on Friday morning.
 
The anxiously awaited hedge fund, Fortress Investment Group (NYSE: FIG proposed), makes its debut on Friday. The offering was not on the calendar Thursday afternoon.
 
Here’s what happened.
 
On Friday morning, Feb. 2, Fortress Investment Group filed an undated amendment and bankers set a pricing date for the following Friday morning, Feb. 9. That’s unusually fast.
 
The road show normally starts about two weeks before an IPO’s pricing date. This time, Fortress gave the world five days’ notice.
 
It also tells you something about the deal. At its current price levels, bankers have a solid, oversubscribed book. So why wait?
 
There was more.
 
Call Central Casting
The lineup of managers underwent a dramatic change. But before getting into that, let’s back up a bit.
 
On Nov. 11, 2006, Fortress filed for its IPO to raise $750 million. That was the first, and so far the only, hedge fund to make plans to go public.
 
Goldman Sachs was named the lead manager. Banc of America, Citigroup, Deutsche Bank and Lehman Brothers were named the co-managers.
 
Fast forward to Jan. 19, 2007.
 
Fortress filed an amendment setting proposed offering terms to price 34.3 million shares at $16.50 to $18.50 each. There were no changes in the underwriting team and no pricing date was given.
 
By Thursday afternoon, on Feb. 1, the deal was still listed as “to be announced” -– no pricing date. By Friday morning, things changed.
 
Fortress filed another amendment. The company was still looking to price 34.3 million shares at $16.50 to $18.50 each.
 
Drum roll, please: There were changes in the underwriting team.
 
Goldman Sachs AND Lehman Brothers were named the joint-lead managers. Banc of America, Citigroup and Deutsche Bank were named the senior co-managers. And Bear Stearns, Lazard Capital Markets, Merrill Lynch, Morgan Stanley and Wells Fargo Securities were added as junior co-managers.
 
What might surprise some was moving Lehman Brothers up to a joint-lead manager.
 
The biggest surprise, though, was that Lehman Brothers had not been named a joint-lead manager from the beginning. After all, a couple of Fortress Investment’s senior managers were Lehman Brother alumni.
 
So how is the deal viewed by IPO buyers?
 
It’s hot. It shouldn’t come as a surprise if it’s on everybody’s “Most Wanted” list with the IPO reaching for the stars when it starts trading on Friday morning.
 
 
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